Conagra Brands, Inc. (CAG) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Conagra Brands, Inc. (CAG)

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Intrinsic Value (DCF)

Current$17.37
Intrinsic$32.22
+85%
$16.61$32.22$61.90
Market implies 1% growth for 5 years
DCF analysis suggests CAG could have 85% upside at 8% growth — verify assumptions match your view.
At $17, the market prices in only 1% growth — below historical 8%, suggesting low expectations.
Range: Bear $17 → Bull $62. Current price implies expectations below the base case, but well above the bear case.
Discount ↓Growth →4%6%8%10%
8%$41$47$52$59
10%$25$28$32$36
12%$15$18$21$24
14%$9$11$14$16

Bull Case

  • Bull case ($62) offers 256% upside at 10% growth, 9% discount
  • 46% margin of safety vs. base case estimate
  • Market-implied growth (1%) ≤ historical CAGR (8%)

Bear Case

  • Bear case ($17) implies 4% downside at 6% growth, 12% discount
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5-Year Free Cash Flow Projection

Year 1$1.41B
Year 2$1.52B
Year 3$1.64B
Year 4$1.77B
Year 5$1.91B
Terminal$28.16B

📐 Model Inputs

Growth Rate8.0%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base Free Cash Flow$1.30BTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. See FAQ below for full methodology.

Frequently Asked Questions

Is CAG stock undervalued or overvalued?
🟢 UNDERVALUED

CAG trades at $17.37 vs. our DCF-derived intrinsic value of $32.22, implying +91% upside. At a 10.0% WACC and 8.0% projected FCF growth, the market appears to be underpricing the present value of CAG's future cash flows. The bear case ($18.59) still suggests upside, providing margin of safety.

What is CAG's intrinsic value?

Using a 5-year DCF model: Base FCF of $1.30B, projected at 8.0% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $8.24B net debt and dividing by 0.48B shares: Bear $18.59 | Base $32.22 | Bull $50.44. Current price $17.37 implies +91% to base case.

How is CAG's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 8.0% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($23.65B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 18.2x.